Business research news, tips, facts and sources from the Library research team at the London Business School Library.

15 December 2010

Biotech reinvented: Where do you go from here?

Biotech and pharma companies will need to work together to create value: Governments around the world are trying to cut healthcare costs, and finding new drugs is getting harder. We've taken a closer look at what this means for the biotech industry in particular.

Biotech hasn't yet changed the face of drug development: The industry is now about 30 years old but it hasn’t completely fulfilled its promise. Drugs aren't being developed notably faster, cheaper, or with less risk. The Biotech business model relied on lots of seed money from financial investors, but this is getting harder to come by as the research base moves east and emerging economies fight for their share.

Boundaries between biotech and pharma are blurring: Biotech and Pharma are effectively becoming one industry - the biopharmaceutical industry - although there's a limit to how far Pharma can go down the Biotech route. Pharma can't copy Biotech's discovery and development methodology too closely and, even if it could, Biotech hasn't brought a golden era of productivity that would justify doing so. All biopharmaceutical companies - whether biotechnological or pharmaceutical in origin - will have to adopt a very different business model.

Biotech's future lies in collaboration: What will the new business model look like? It will probably include more types of cooperation. The largest biopharmaceutical companies will be responsible for coordinating and funding federations and consortia. In return they'll get access to more innovation, reduced costs and improved productivity. Smaller biopharmaceutical companies, research institutes and academic medical centres will be responsible for generating original ideas and providing disease biology and platform technologies on a fee-for-service basis.